Chapter 10 Product and Brand Decisions

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Chapter 10 Product and Brand Decisions
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Introduction to Brands and Products

• Brand and product concepts
• Local, international, and global brands
• Product design issues
• Attitudes toward foreign products
• Strategic alternatives
• New product issues

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Basic Product Concepts

• A product is a good, service, or idea
• Tangible attributes
• Intangible attributes
• Product classification
• Consumer goods
• Industrial goods

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Product Types

• Buyer orientation
• Amount of effort expended on purchase
• Convenience
• Preference
• Shopping
• Specialty

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Brands

• Bundle of images and experiences in the
  customers mind
• A promise made by a particular company about a
  particular product
• A quality certification
• Differentiation between competing products
• The sum of impressions about a brand is the brand
  image

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Brands
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Brand Equity

• The added value that accrues to a product as a
  result of investments in the marketing of the
  brand
• An asset that represents the value created by the
  relationship between the brand and customer over
  time

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Local Products and Brands

• Brands that have achieved success in a single
  national market
• Represent the lifeblood of domestic companies
• Entrenched local products/brands can be a
  significant competitive hurdle to global companies

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International Products and Brands

• Offered in several markets in a particular region
• Euro brands

The Smart car was developed by DaimlerChrysler
for the European market.
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Global Products and Brands

• Global products meet the wants and needs of a
  global market and are offered in all world
  regions
• Global brands have the same name and similar
  image and positioning throughout the world

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Global Products and Brands

• A multinational has operations in different
  countries. A global company views the world as
  a single country. We know Argentina and France
  are different, but we treat them the same. We
  sell them the same products, we use the same
  production methods, we have the same corporate
  policies. We even use the same advertisingin a
  different language, of course.
• Alfred Zeien Former Gillette CEO

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Global Brand Characteristics

• Quality signalallows a company to charge a
  premium price in a highly competitive market
• Global mythmarketers can use global consumer
  culture positioning to link the brand identity to
  any part of the world
• Social responsibilityshows how a company
  addresses social problems

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Global Products and Brands

• Global brands are not the same as global products
• iPod brand
• Mp3 player product

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Branding Strategies

• Combination or tiered branding allows marketers
  to leverage a companys reputation while
  developing a distinctive identity for a line of
  products
• Sony Walkman
• Co-branding features two or more company or
  product brands
• NutraSweet and Coca-Cola
• Intel Inside

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Brand Extension

• Brand acts as an umbrella for new products
• Ex The Virgin Group
• Virgin Entertainment Virgin Mega-stores and MGM
  Cinemas
• Virgin Trading Virgin Cola and Virgin Vodka
• Virgin Radio
• Virgin Media Group Virgin Publishing, Virgin
  Television, Virgin Net
• Virgin Hotels
• Virgin Travel Group Virgin Atlantic Airways,
  Virgin Holidays

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Worlds Most Valuable Brands, 2006

• Coca-Cola
• Microsoft
• IBM
• GE
• Intel
• Nokia
• Toyota
• Disney

• Louis Vuitton
• Cisco
• Honda
• Samsung
• Merrill-Lynch
• Pepsi
• Nescafe
• Google
• Dell

• McDonalds
• Mercedes-Benz
• Citi
• Marlboro
• Hewlett-Packard
• American Express
• BMW
• Gillette

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Global Brand Development

• Questions to ask when management seeks to build a
  global brand
• Does this move fit the company and/or its
  markets?
• Will anticipated scale economies materialize?
• How difficult will it be to develop a global
  brand team?
• Can a single brand be imposed on all markets
  successfully?

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Global Brand Development

• Global brand leadership
• Using organizational structures, processes, and
  cultures to allocate brand-building resources
  globally, to create global synergies, and to
  develop a global brand strategy that coordinates
  and leverages country brand strategies

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Global Brand Development

• Create a compelling value proposition
• Think about all elements of brand identity and
  select names, marks, and symbols that have the
  potential for globalization
• Research the alternatives of extending a national
  brand versus adopting a new brand identity
  globally
• Develop a company-wide communication system

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Global Brand Development

• Develop a consistent planning process
• Assign specific responsibility for managing
  branding issues
• Execute brand-building strategies
• Harmonize, unravel confusion, and eliminate
  complexity

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Local versus Global Products and Brands A
Needs-Based Approach
Maslows hierarchy of needs
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Asian Hierarchy of Needs

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Country of Origin as Brand Element

• Perceptions about and attitudes toward particular
  countries often extend to products and brands
  known to originate in those countries
• Japan
• Germany
• France
• Italy

French perfume
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Packaging

• Consumer packaged goods refers to products whose
  packaging is designed to protect or contain the
  product during shipping, at retail, or point of
  use
• Eco-packaging is key because package designers
  must address environmental issues
• Offers communication cues that provide consumers
  with a basis for making a purchase decision

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Labeling

• Provides consumers with various types of
  information
• Regulations differ by country regarding various
  products
• Health warnings on tobacco products
• American Automobile Labeling Act clarifies the
  country of origin and final assembly point
• European Union requires labels on all food
  products that include ingredients from
  genetically modified crops

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Aesthetics

• Global marketers must understand the importance
  of visual aesthetics
• Aesthetic styles (degree of complexity found on a
  label) differ around the world

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Product Warranties

• Express warranty is a written guarantee that
  assures the buyer is getting what he or she paid
  for or provides a remedy in case of a product
  failure
• Warranties can be used as a competitive tool

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Extend, Adapt, Create Strategic Alternatives in
Global Marketing

• Extensionoffering product virtually unchanged in
  markets outside of home country
• Adaptationchanging elements of design, function,
  and packaging according to needs of different
  country markets
• Creationdeveloping new products for the world
  market

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Global Product Planning Strategic Alternatives
Product
Same Different
Communication
Strategy 2 Product extension communication
adaptation
Strategy 4 Dual adaptation
Different Same
Strategy 3 Product adaptation communication exten
sion
Strategy 1 Dual extension
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Product Invention

• Strategy 5
• Important for reaching mass markets in less
  industrialized nations and certain segments
  industrialized countries
• Hand-cranked radios for areas with no electricity
• Total toothpaste by Colgate uses global benefit
  segmentation

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How to Choose a Strategy

• Two errors that management makes in choosing a
  strategy
• NIH (not invented here) syndrome means managers
  ignore the advancements of subsidiaries overseas
• Managers impose policies upon subsidiaries
  because they assume what is right for customers
  in one market is right in every market

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How to Choose a Strategy

• The product itself, defined in terms of the
  function or need it serves
• The market, defined in terms of the conditions
  under which the product is used, preferences of
  potential customers, and ability to buy the
  product
• Adaptation and manufacturing costs the company
  will incur

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New Products in Global Marketing

• Pursue opportunities in competitive arenas of
  global marketplace
• Focus on one or only a few businesses
• Active involvement from senior management
• Ability to recruit and retain best employees
• Understand the importance of speed in bringing
  product to market

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Identifying New Product Ideas

• What is a new product?
• New to those who use it or buy it
• New to the organization
• New to a market

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The International New Product Department

• How big is the market for this product at various
  prices?
• What are the likely competitive moves in response
  to our activity?
• Can we market the product through existing
  structure?
• Can we source the product at a cost that will
  yield an adequate profit?
• Does product fit our strategic development plan

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Testing New Products

• When do you test a new product?
• Whenever a product interacts with human,
  mechanical, or chemical elements because there is
  the potential for a surprising and unexpected
  incompatibility
• Test could simply be observing the product being
  used within the market

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Looking Ahead to Chapter 11

• Pricing decisions